Sales tax changes grace period and key facts

Grace period

In-state retailers:

There is a grace period through May 31, 2019, to comply with these changes to ensure retailers have sufficient time to make the required systems changes. The destination sourcing will be implemented concurrently with the out-of-state retailer sales tax changes. We selected the Dec. 1, 2018 compliance date with that in mind. We know this is a big change for some businesses. The Department will offer a grace period through May 31, 2019, to comply with these changes to ensure retailers have sufficient time to make the required systems changes. Businesses will be granted a waiver from compliance with the destination-sourcing changes automatically until then.

Out-of-state retailers:

There is a grace period through May 31, 2019, to comply with these changes to ensure retailers have sufficient time to make the required systems changes. Businesses will be granted a waiver from compliance with the destination-sourcing changes automatically until then.

However, a retailer that does not collect sales tax during this grace period must still comply with Colorado’s reporting statute: C.R.S. § 39-21-112(3.5). That statute requires non-collecting retailers to provide certain notices to individual Colorado customers and the Department regarding purchases where the retailer did not collect the tax. The reporting requirements for retailers that do not collect tax during the grace period will be strictly enforced. Non-collecting retailers seeking additional information about these reporting requirements should review the statute and Rule 39-21-112(3.5) in 1 CCR 201-1, which is available here.

Key Facts

The changes will standardize the sales tax laws

The Colorado Department of Revenue is making a concerted effort to bring consistency and fairness to sales tax laws for both in-state and out-of-state retailers.

33 other states have similar rules

The move toward destination-based sales tax is the direction the majority of the country is moving in. Please visit www.streamlinedsalestax.org for more information.

Levels the playing field

The new sales tax changes will create equal footing for all businesses so no business has a particular advantage from a sales tax perspective.

You don't need a sales tax license for any state-collected jurisdictions if you have one with Colorado

The Colorado Department of Revenue is the single state authority to administer (register, collect, distribute and audit) sales taxes for all state-collected jurisdictions in the state of Colorado. This means retailers are not required to register separately with state-collected local jurisdictions to collect local sales taxes. Some local jurisdictions may have a separate requirement for retailers doing business in their jurisdictions to register with them for a business license but that has no impact on the administration of sales tax. The Colorado Department of Revenue does not require any local registration to collect state-collected local jurisdiction sales taxes.

Five databases to determine what taxes need to be collected

The Colorado Department of Revenue has provided retailers five databases to choose from – all of which are hold-harmless. This means taxpayers who use these are not liable for sales taxes otherwise owed to Colorado and its state-collected municipalities, counties and special districts should a database incorrectly designate the location of a taxable sale or service. We also have a list of approved software vendors, which allow businesses to file electronic returns efficiently. However, please be aware there are some self-collecting jurisdictions in Colorado for which CDOR does not collect.

Revenue Online simplifies the process

Retailers can file all required returns and make a single payment with Revenue Online. Some of the confusion stems from self-collecting jurisdictions, for which the Department of Revenue does not collect and whom to contact about those jurisdictions.